Trading is NOT about being right or wrong!
Trading IS about Managing Money!
Tuesday, May 26, 2015
Prediction versus Money Management
I posted this last week in the Linkedin Group - Trader, Trading & Risk Psychology hoping to begin a discussion. Some excellent professional comments have so far presented themselves. Now lets see if you can add your expertise.
The Prudent Trader tag line is:
Trading is NOT about being right or wrong. Trading IS about managing money.
Yet it seems that most of what I read on the Internet and the Financial media deals with prediction, being right in the forecast. Conveniently left out, risk assessment and money management. Of course this will allow the author to be eventually right, regardless of what happens beforehand .
In this authors Humble Opinion, one needs a trading/investing plan based upon the management of your total account, How will the monies be divided up, what are the risk parameters? Are the risk parameters calculated on the individual trade or the total account size? How do you calculate the appropriate position size? etc, etc